Francesco Danzi @en – European Affairs Magazine

Business value and risk management

All businesses face similar risks in their daily routine. Understanding what risks we are going through is not as simple as it seems to be. But it is sure, no matter what business we are involved in, that we have to deal with risks of different nature, that will hit our interests in various ways and will affect the health of our business.

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The way it will happen is strictly linked to two points, that are pivotal: the first concerns the planning of the appropriate countermeasures, the second concerns the actions. This two big areas include multiple activities, that all start from the very understanding of the meaning of risk.

Considering the risk and therefore the possibility that an undesired event might take place is, first of all, an assumption of responsibility. It is so because it involves the structure of the business as a whole. It involves not only the money but the people behind them, involves the physical infrastructure (consider the example of a natural disaster), the IT infrastructures.

Risk can be defined as the probability that a damaging event has to happen. It is therefore a probability, which means that is based on two opposite considerations, that finally determine the likelihood of an event, given some variables: whether if an undesired and harmful event will happen or not. From here it comes natural that, before considering the probability of an event, and whether we are going to face it or not, or whether we will rather consider it or not, we have to accept it. This is the first step, a step we could call “the acceptance” of the risk. Gaining acceptance of risk will give us big advantages. This step is going to shape decision making policies in all the aspects of the organization, since it is related with the factor that is probably the most important among all those involved in the processes: the human factor. Gaining acceptance of risk means gain acceptance of the role of uncertainty. Especially in a globalized world, guided by the globalizations of the financial flows (volatility of the financial markets) and the globalization of the information, that amplifies and differentiates incomes and outcomes.

A comprehensive understanding of risk must take into consideration also the consequences of the event. This is even more important because it allows us to focus not only on data and scenarios that, at least at the beginning can seem to be unclear and dispersive, but allows us to stay focused on the importance of our business, showing what could be the consequences once one or more events will take place. We are not talking about a step, neither we are talking about an overnight and immediate success.

Then, what risk management is? It can be considered as a process, a sum of actions focused on a specific but not static path, whose goal is to foreseen accidents to whom oppose a predetermined action. What a good risk management policy is aimed to do is to protect the value at a firm. The value can be considered as the intrinsic and extrinsic merit of the assets, that will ultimately bring an increase of money, better reputation and so on. So we have tangible and intangible value (think about the value of the experience of the employees). And despite the intangible value is often underestimated because apparently not able to bring added value or profit, it is the very treasure of every corporation.

A good risk management policy is, after all, a process through which the elements involved are able to be exploited as best as possible and, by doing this, the involvement of the team is paramount (consider the importance of the Human Resources Manager or Consultant, once far from being at the center of the organization policy, now the core of the biggest and larger success firms). It gives, by the accuracy of the process and the assessment, the possibility to share knowledge, share participation.

Therefore, a good business policy is able to do two pivotal things: on one side it protects and improves the expertises of the single members of the team (and acts as a glue among them), and at the same time allows the business to wisely pinpoint critical factors, elements, verify them and solve the issues. This way it helps evolve the business and the people involved in it. Never take it for granted. This process will give a corporation the benefits of the establishment of a better networking policy between people, colleagues, teams and different corporation environments. The comprehensive use of the good tools in risk management practices will help create a better networking grid in the business, allowing all the floors communicating, acting, assessing and evaluating in a fluid and pragmatic manner.

The assets then can be included in three big categories. Human, organizational and structural asset. What can undermine the value of a business is usually called threat, but the possibility that a single or multiple set of threats are able to harm the interests of a business is increased by the existing links between all the assets and their vulnerabilities. We can imagine a vulnerability as an intrinsic feature of an asset. More, having every asset its own vulnerability (or vulnerabilities) and being connected in a grid with other assets, a harmful event could show up as a cascade process, as a multiplier of threats itself.

Risk has, in its definition (although we have to consider the little convergence of the numerous definitions of the term) a downside and an upside, that are known as crisis and opportunity. Without a correct risk management process we won’t be able to exploit the opportunity. But being concerned about risk doesn’t have to mean that a manager has to avoid it tu cur: the process of managing and assessing risks has one important goal, at the very end. The core of the processes to minimize damages and avoid useless risks, focusing instead on those that are worth it. It’s true that every risk that aims to a better life, more knowledge or more money it’s theoretically worth it. Minimizing risks and minimizing losses, means take those risks that really worth efforts. So, a business that decides not to be exposed to risks, is unlikely to generate new incomes. A business that is exposed to the wrong risks is likely to suffer big losses. What risk management is supposed to do is just a “check and balance” between risk and reward.

Risk management has to be addressed with a wider view. Theories have usually provided different ways to look at it, often too narrow, though every sector has its own policy and methodology. The narrower is the risk a company decides to consider, the more it will be prepared to face it. It is, simply, a more complete and competitive view of risks that enabled, at the very end, their victory and success.
Francesco Danzi

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Risk Assessment in drone warfare policy

9 Settembre 2015 Americas/Innovation di

Capable of long endurance and being refueled during the flight, they are almost invisible and extremely precise. There is nothing more that you can expect from a weapon. Drones, which are not only aircraft, became the most controversial weapon in the new way of conducting wars. Especially from the beginning of the war against terrorism that legitimates the use of asymmetric technology, in order to contrast an asymmetric threat. The term “asymmetric” is incorrect, but for convenience we will continue to use it.

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Drones have been largely deployed in the conduct of secret military operations even in restricted air zones, outside the official war zones, with the purpose of eliminating individuals. Targeted killing missions, directed from thousands miles away with the use of local intel, conducted by firing rockets from unmanned aircraft in order to hit specific parties directly or indirectly connected with terrorist cells. The United States government doesn’t talk about the use of drones in specific missions in Iraq or Afghanistan, although it is believed that drones have been used in Pakistan as well for a long time. On one hand there no precise data or numbers exist. On the other hand, the terrorist organizations or the authorities that deal out the attacks have the tendency to exaggerate numbers and statistics. The biggest mistake made is probably that insufficient attention has been paid to the consequences of these campaigns on the victims and societies involved. Victims are not only those directly involved or wounded in the attacks but the entire community, which perceives those operations and the way they are conducted illegitimate and unfair. Zhao Jinglun affirms that, according to President Obama’s point of view, these policies are somehow themselves legitimate.

The Guardian defines the fear caused by those operations as “civil terror”. President Obama is just following the path of his predecessor George W. Bush with this policy, and it is believed that drone operations are also conducted in the horn of Africa, not just in Yemen or Pakistan or on any of the traditional battlefields. Drones: myths and reality in Pakistan (2013) reports the following: “CIA Director Leon Panetta was particularly forceful about trying to get Pakistani officials to allow armed drones to fly over even wider areas in the northwest tribal regions” and, regarding the reactions of the Pakistani administration, “It is thus amply clear that the military does not oppose drones, but seeks control over their use, or at least to leverage the debate to obtain more say over target selection”. But there is still the reality of the numbers in the field. According to the Bureau of investigative journalism more than 2000 deaths have been reported since 2006, with the highest percentage registered in 2010. Hundreds of civilians are involved, and hundreds have not yet been identified.

Retired Gen. Stanley Mc Crystal states the following: “The resentment created by American use of unmanned strikes … is much greater than the average American appreciates. They are hated on a visceral level, even by people who’ve never seen one or seen the effects of one”.

On the ground we have learned what the use of this weapon can be, its new possibilities, the political decisions that lay behind the deployment of such technology, States should build and shared a new and comprehensive risk assessment framework. But what kind of elements need to be considered? Certainly the introduction of such weapon brings new outcomes, in some cases revolutionizing policies and military strategies.

What are the facts emerging?

The deployment of military and the managing of related tactics in ground operations are largely effected by the use of drones. Either equipped or with a standard profile, this instrument is able to offer a wide grid of chances that in the past were available only with high financial costs – for example using drones and replacing helicopters, saving human lives, etc. Some of them can be carried on ships, can be flown and land as planes or helicopters. Versatile and able to operate in any kind of weather condition, drones represent an exceptional weapon. They can guarantee enhancement of air superiority, extending the power in the air and consequently on the ground (or views) and therefore improving the so-called soft power also in peace or no conflict situations. Air reconnaissance can be carried out and implemented during terrestrial reconnaissance, before, throughout and after military operations, supporting troops and providing essential information.
It would be desirable that policy makers could discuss the use and consequences of this weapon, hopefully under the guarantee of some kind of international agreement. Certainly this is unlikely to happen given the present situation, especially since lots of operations are still covered and classified. The absence of public debate is a concern, and the possibility that this happens because governments conduct secret operation, is probable and likely to be the reality of the facts.
Negative effects are serious, clear and numerous. Not only are we unaware of the effective number of the attacks that have been conducted, but we also are ignorant of the exact number of fatalities. A report released by the NY University reveals how the attacks impede the aid from humanitarian organizations arriving in the impacted zones. Therefore, the local population involved in the attacks is forced to abandon places without being able to return and recover their lives. The terror that these kinds of operations are causing is widespread and generic, what I have previously described as “the fighter syndrome”.
Drones are largely known as weapons with different capabilities. One of the biggest threats that has to be considered, and is not so remote, is the possibility that this technology will one day be used by non-governmental parties. This is already so, and with the rising of the ISIS threat is likely to become another possible reason of concern.

Therefore, it would be desirable to create intergovernmental commissions that, together with panels of experts and international observers, could investigate the causes and effects of these policies.

Some of the actions that should be undertaken are:

Making policies regarding the use of drones more transparent, both in the national and international debates.
Establish a common legal framework so as to be able to establish common policies and best practices. Work closely to extend the jurisdiction of the International Courts and international law regarding the new profiles that are emerging.
Enhancing international law application and accountability that, respecting national sovereignty and therefore creating a safe framework for all those non-governmental organizations that cannot presently operate and provide support in distressed areas.
Open a confrontation on important issues on drone policies, such as rules for reconnaissance, quality of the targets, procedures for engagement and reliability of the information that are the basis of the decision-making process.
Create a support system able to intervene promptly at a local level and capable of absorbing the negative effects that arise from targeted operations. These operations can be carried out with the use of volunteer non-governmental organizations and military, diplomatic and political efforts. Peace keeping and peace enforcing operations could also help, as would more efforts to guarantee humanitarian corridors. Considering that it is almost impossible to eliminate the margin of error, responsibilities and accountabilities should always exist.

Francesco Danzi

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